Communicate, Communicate

It's tough to keep backers motivated during growth periods when your business is gobbling cash and producing red ink. But you'll win points if you keep them informed. Here's a lesson in communication from Patrick Duffeler, the CEO of $2-million-plus Williamsburg Winery, in Williamsburg, Va., which took five years to generate a profit:

Be timely. Since the winery's earliest days, when it had only three outside investors, Duffeler has always issued quarterly reports. "Information keeps your investors active," he says.

Be comprehensive. Duffeler uses his quarterly reports not only to reveal revenue and operational results but also to discuss industry trends and, of course, to broadcast big news such as the winning of awards. His investors even get the bad news -- for example, when the grape harvest is poor.

Be modest about goals. "In June of 1987 we forecast that we would sell 20,000 cases in 1993 -- and we sold about double that. If you don't set expectations too high, investors are likelier to be satisfied with strategies designed for long-term success," says Duffeler.